Hacker News Reader

Comment by ankitoberoi | Hacker News Reader

Quote - "Huge profitability gained by bringing back black money stashed abroad in order to cover Election expenses".

The rupee can't devalue because of this. Large buy orders would only make the rupee appreciate. Rather, what would still make more sense is the politicians and businessmen sending the black money abroad, just before the elections to safeguard it due to the uncertainty if the next government would support them.

View on HN

He is not suggesting that the Rupee is devalued due to money being brought back.

Rather he is suggesting that the currency is being manipulated using other means so that money which is brought back from abroad gets a much more favorable rate when converted into rupees.

Not sure whether I agree with this though

What could these other means be to manipulate the currency in an open market?

I haven't noticed any policy changes and RBI, is primarily selling dollars, in low quantities though.

You are not quite understanding the graphs (and their proposed interpretation ) correctly. What the OP is saying is that the Rupee is being devalued (As seen by rising $ to Rupee curve) by the Govt in power, in the months preceding the next general elections in preparation for getting their stashed money (dollars) from outside (Swiss banks) into India and get a favorable exchange/conversion rate. As seen in the curve, the curve apparently goes up (dollar value goes up) right until just before the elections, and then the black money is brought in and converted in large amounts, which as you suggest appreciates the Rupee value immediately( as seen by the curve starting to go down).

I was thinking the same thing. Your reasoning makes more sense.

Edit: but again, they could send back money any time, just to be sure. But they do need money urgently during elections. Not so sure about your reasoning now.

Reply on news.ycombinator.com